The J‐ and S‐curves: a survey of the recent literature

TLDR: In this article, the authors reviewed the literature on the J and S curves and proposed a method to test the validity of the J• and S-curves empirically, and showed that currency depreciation worsens the trade balance before improving it.

Abstract: Purpose – Since the introduction of the concepts of the J‐ and S‐curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and to offer direction for future research.Design/methodology/approach – This is a review paper. As such, no method is employed here. Rather, the methodologies used by others to test the J‐ and S‐curves are explained and reviewed.Findings – No new findings are offered since this is a review paper.Practical implications – The J‐ and S‐curves show whether currency depreciation worsens the trade balance first before improving it. Since the majority of studies are country‐specific, policymakers could benefit by learning whether currency depreciation will be effective in improving the trade balance.Originality/value – This is a literature review paper and its originality is in terms of collecting the literature together and presenting it in one single paper.